WASHINGTON — Karen Downing, a U.S. Navy retiree living on Virginia’s Eastern Shore, voted for Joe Biden in November 2020 — expecting the new president to end the COVID-19 crisis and then pivot to tackling broader and long-standing social ills, like alleviating student loan debt and increasing access to mental health services.
Downing, 58, says she figured that Biden’s presidency would be “an uphill battle on how to bring the country together, knowing that change takes time.” She was a huge supporter of his sweeping "Build Back Better" social spending package, believing it would address entrenched socioeconomic problems.
But the precipitous rise in inflation to the highest rates in four decades — even before the Russia-Ukraine crisis, which risks further boosting energy costs — has taken her aback. She found herself earlier this month worrying how a family-pack of chicken wings before the Super Bowl became so costly.
Inflation has starkly colored not just Downing’s views of the direction of the country, but those of millions of Americans who will be deciding whether to keep Democrats in control of Congress in November, and the White House in 2024. Biden gets a fresh chance to shape opinion when he delivers his State of the Union speech on March 1.
“I’d give Biden a grade of more like a C. And C-minus on the economy — not necessarily for his efforts, but for the results,” Downing said. She said price increases have been most notable for staples — milk, bread, meat and gasoline.
“In a rural area, like where I live, we have to pay whatever the economy will bear,” she said. “Right now, with the demand being so great, people can charge whatever they want.”
That demand has been fueled by a powerful jobs recovery under Biden — unemployment has fallen to 4%, well below the 6.4% average of the last economic expansion — along with an historic expansion in federal support for families, with stimulus checks and enlarged, monthly child-tax credit payouts.
It’s propelled a U.S. rebound that’s handily outpaced that of other major developed nations. Yet for many Americans, inflation is proving the one indicator that washes all the others away.
A 51% majority of Americans surveyed last month said they were very satisfied with their own lives, yet only 4% said they were very satisfied with the direction of the country. A Gallup poll from early February showed just 37% of Americans approved of Biden’s handling of the economy.
“The psychology of inflation is pretty well documented — how people view inflation is how they view their perceptions of the economy,” said John Anzalone, Biden’s leading pollster during the 2020 campaign. “People have a great deal of anxiety right now.”
Biden’s chief of staff, Ron Klain, assured Democratic senators in a meeting at the U.S. Capitol earlier this month that the president would spend time in his State of the Union remarks laying out the administration’s efforts to bring down prices, according to lawmakers who attended. Even White House aides, along with other allies of the president have been worried that inflation is drowning out the broader picture of an economy returning to health.
“Biden and the Democrats won’t be trusted on the economy without clearing inflation because voters aren’t going to reward the party in power if they feel worse off,” said Lindsay Owens, a former economic adviser to Senator Elizabeth Warren who is now executive director of the Groundwork Collaborative, a progressive economic think tank.
The White House’s tools to combat inflation are limited, as the U.S. Federal Reserve is the key actor. While Fed policy makers are set to start raising interest rates next month, their efforts are likely to take months, if not years, to bring price increases back toward their 2% target. A government report Friday showed the Fed’s preferred inflation gauge climbed an annual 5.2% in January, the most since 1983.
“The economic timetable for resolving these things has nothing to do with the political timetable,” said Austan Goolsbee, chairman of the Council of Economic Advisers under President Barack Obama. “Most economists would say, ‘We should sit there for five months to figure out the nature of this,’ but if you are in the White House, you can’t do that to figure out if inflation is permanent or transitory. This puts them in an uncomfortable spot.”
Biden has focused on trying to smooth out bottlenecks in U.S. supply chains, particularly backlogs at ports, and encouraged antitrust agencies to crack down on consolidation in industries where prices have rapidly escalated, including meatpacking.
The administration has also revamped its rhetoric, ditching the message that the surge in prices would prove “transitory.” After the president’s approval ratings began nosediving in the fall, Biden more often directly addressed the impact of rising prices on everyday Americans, even as he also tried to showcase brighter economic data including a job market that’s so hot employers are now bidding for workers through higher pay packets.
Wage increases — particularly at the bottom end of the pay scale and for those who work for hourly rates — have surged. One gauge from the Federal Reserve Bank of Atlanta shows a 5.1% annual pace of gains, the best since before the global financial crisis.
Trouble is, inflation is running even faster.
“Most people think that their real income is declining and living standards are getting squeezed,” said Richard Curtin, who has directed the consumer sentiment survey at the University of Michigan for more than four decades. According to his survey, inflation expectations are the highest since 2008.
Republicans, at the same time, have made inflation the centerpiece of their argument that voters should return control of Congress to their party in November.
“I’m glad that the Democrats are finally coming to the conclusion that this is an issue that needs to be addressed,” Senator John Thune, a South Dakota Republican, said in mid-February. “But they missed the boat a long time ago.”
The Biden team is banking on inflation moderating in time for Democrats to catch a break in the midterms. Economists do see a deceleration, forecasting consumer prices to climb an annual 4.7% in the quarter through September, down from the blistering 7.5% pace of January.
Whether that’s enough to salve enough voters’ concerns is unclear. The administration in office more often than not pays the price for voters’ views on the economy. In 1980, President Jimmy Carter lost re-election even though his policies had begun to quell inflation, and in 2008 Republicans lost the presidency and Congress despite a credit crisis with thoroughly bipartisan roots.
In Virginia, Biden can at least still count on Downing, who says she would vote for Biden again in 2024. Yet she points to the dangers of the inflation shock.
“In my lifetime, I remember in the 1980s when there were odds and even days for getting gas,” she says. “The generations now have no idea of anything like that.”
